How news that Smith & Nephew may acquire NuVasive affected stock price

Spinal Tech

NuVasive's premarket target price jumped up while Smith & Nephew's dropped Feb. 11, amid rumors about the companies, according to Seeking Alpha.

Late on Feb. 8, the Financial Times reported Smith & Nephew "held talks" with NuVasive about a possible acquisition, reporting a deal exceeding $3 billion. Neither company has confirmed the report, but NuVasive's stock jumped 25 percent after hours, according to Seeking Alpha.

Smith & Nephew does not currently have a spine business, but rather focuses on orthopedic reconstruction, sports medicine, trauma and advanced wound management. NuVasive, focused on spine products, would bring new expertise. Smith & Nephew completed the acquisition of Ceterix in January for up to $105 million, and more deals could be on the horizon.

During the fourth quarter and full year 2018 financial report conference call, CEO Namal Nawana said: "We're also looking at deals to get access to adjacent market[s] where there's a good strategic fit for Smith & Nephew."

Smith & Nephew aims to maintain a strong balance sheet and investment-grade ratings through any potential acquisitions. "I think there's always good opportunities, you just have to work hard to find which ones at which time," said Mr. Nawana.

However, Bloomberg reported Piper Jaffray analysts said in a note they don't expect the transaction to occur and Cantor Fitzgerald reported there would be "more attractive" target companies if Smith & Nephew decides to add spine in the future.

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